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The NFP miss sent the USDCAD lower, but the bullish bias is still intact.

The Non-Farm Payrolls (NFP) report released last Friday fell short of expectations, ending a streak of 14 consecutive beats. However, other economic indicators remained strong, such as average hourly earnings, which increased. This rise in wages is not in line with the preferences of the Federal Reserve (Fed). Despite the disappointing NFP report, market expectations for a 25 basis points (bps) interest rate hike at the July meeting remained unchanged. Surprisingly, the US dollar (USD) weakened against other currencies despite these expectations.

The Bank of Canada (BoC) is anticipated to raise interest rates by 25 bps at its upcoming meeting tomorrow due to persistent high inflation rates and a tight job market. However, there is also a possibility that the BoC might choose to hold off on a rate hike during this meeting. If the BoC does decide to skip the rate hike, it could result in an upward boost for the USD/CAD currency pair, particularly if the US Consumer Price Index (CPI) surpasses expectations.

Analyzing the daily chart, it appears that the breach below the critical support level of 1.3225 could potentially be a false breakout. Currently, the moving averages have crossed in an upward direction, indicating a shift in bullish momentum. It is probable that buyers will enter the market, finding support near the 1.3225 level, specifically leaning on the red 21-day moving average. Their target could be the resistance level at 1.3664, anticipating further upside movement for the pair.



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